Farmers are facing unprecedented input prices and have no relief in sight. To make matters worse, agriculture prices are predicted to fall. How can you maximize the claims your agriculture insurance policy will pay and reduce costs?
Farmers can purchase agriculture insurance to protect their financial losses if their crops fail, but that is not the only way crop insurance protects those who buy it. It also protects farmers if they lose money because of the prices they receive for the crops they sell. In fact, over 20,000 farming jobs were saved in four states ten years ago due to protection with agriculture insurance!
In addition, buying insurance insulates farmers from the adverse effects of economic problems.
Here are several considerations when high costs lead to low profitability:
- Avoid common agriculture insurance mistakes: Make sure you can receive the full benefit of your policy by avoiding the most common errors that cause money to be lost:
- Filing claims late.
- Over- or under-reporting your total acreage.
- Be careful when decreasing your coverage and look at your break-even: If lowering your agriculture insurance coverage or policy will put you well below your input costs, consider what will happen in a claim year through the following questions:
- Can you cover the costs of farming out of pocket before your insurance starts paying you in claims or while it is still processing?
- Do you have outstanding loans?
- Are you scaling your operation and need to reinvest?
- Do you have another income source to cover your living expenses or part of your farming operation while the claim is still processing?
- Customize products needed through your agent: Don’t under or over-protect crops. Get a policy that’s adequate for your assets. Farming is an individualized industry, so you should talk to your insurance agent about the plans available to your farm, crop rotation, added or removed acres, and general farming practices to decide which policies are right for you without breaking the bank.
- Take note that agriculture insurance coverage is by agriculture or county: Your coverage on soybeans crops will not be the same as what you choose for corn. Examining which crops are more volatile and where your major loss concerns might be an opportunity to discuss strategy and cost savings while giving you the same major protections you enjoyed before.
- Use your agriculture insurance guarantees to make smart decisions on your farm: A good practice is to look at your farm’s yield history. What can you reasonably expect to yield during the “regular” growing season? With this information, you can do the following:
- Forward contract your grain and avoid the “lows” typical in one year of marketing.
- Observe which farms are high producing and low producing and use that information to make decisions about your fertilization, tiling, soil sampling, and agriculture processes.
- If applicable, confirm any rent fluctuations you expect for the year with your landlords.
- Utilize analytics. You can examine where and when major losses have occurred in the past to help protect you against shifts in coverage and see where you should be investing in agriculture or market protection.
Let Us Protect Your Crops
Crop Insurance Services by AMS provides agriculture insurance policies that protect your products from named peril, multiple perils, losses, and more. Check out our comprehensive policies by visiting our website today!